MSMEs seek more time, call for ECLGS 3.0 | Economic Times

NEW DELHI: An industry body representing micro, small and medium enterprises has written to the Reserve Bank of India seeking to defer payment of instalments of emergency loans availed under last year’s Covid-19 relief package, citing a severe second wave of the pandemic.Likening the current situation to an “emergency”, Federation of Indian Small and Medium Enterprises (FISME) said the central bank and the government should quickly create a task force with just the relevant stakeholders and the beneficiaries to look into issues faced by small businesses on the ground level. The government had unveiled the emergency credit line guarantee scheme (ECLGS) in May 2020 for MSMEs to help them tide over the impact of Covid-19 and lockdowns as part of the Atmanirbhar Bharat package. The scheme was later extended to 26 more sectors, and healthcare, through ECLGS 2.0. FISME has now called for an ECLGS 3.0 with “inbuilt flexibility” to be made available to more firms to deal with the current crisis. “Along with tens and thousands of these small establishments, lakhs of workers will come on road, increasing human misery manifold,” it warned. “In economic terms too, it will shrink purchasing power further, creating a vicious circle of downward economic spiral.” In a letter sent to the central bank last week, the industry body has given a laundry list of suggestions, which include bearing the cost of salaries, social security for small businesses, and funding cash losses incurred by MSME borrowers, among other measures.It has suggested suspension of special mentions, acts, norms, and practices of assigning non-performing assets based on automated systems during the Covid period. Bank managers at all levels should be empowered to exercise discretion on a case-to-case basis while firms whose capex may have got stuck midway should be sanctioned term loans, it said. With regards to NPAs, restructuring and enhancement norms may be relaxed on a case-to-case basis, FISME said. “We assure you solutions will emerge, leading to reduction in losses on the national balance sheet in terms of human and material costs to the minimum,” it said.